Buying Bitcoin is preferable to BTC mining in most circumstances — Analysis

While, intuitively, mining Bitcoin may appear like a highly profitable endeavor, research suggests otherwise. 

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While Hashrate Index’s analysis relied on future projections, River Financial, a financial services firm specializing in Bitcoin mining research, looked at historical data to find out whether mining was a better option than directly purchasing BTC. River Financial’s analysts found that in the last five years, owning miners was preferred 53.6% of the time.

The basis of the River Financial analysis is similar to that of Hashrate Index’s report — miners make a profit if Bitcoin’s price increases faster than the network’s hash rate over time or if the price decreases at a slower rate than the network’s hash rate.

However, one caveat of this analysis is that even during times when Bitcoin’s price is rising faster than the hash rate, the miners may still incur a loss due to the actual price being low.

Bearish periods have been particularly tough on Bitcoin miners. For instance, the period toward the end of 2022 is marked as preferable, while Bitcoin miners recorded the lowest revenue levels in two years with a significant wave of miner capitulations during that time.

Both reports appear to agree that mining Bitcoin only makes the most sense right before parabolic bullish periods, with direct Bitcoin purchases being more profitable at all other times.